TPG Capital plans to buy Immucor for $1.97 billion

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Published 4:00 am, Wednesday, July 6, 2011

Immucor Inc., the leading maker of tests to screen blood before transfusions, has agreed to sell itself to private-equity firm TPG Capital for $1.97 billion.

The price of $27 a share is 30 percent more than Immucor's closing price Friday, the last trading day before the deal was announced, Immucor said in a statement Tuesday. Immucor said that under the agreement it may solicit higher bids from other suitors through Aug. 15, sending shares as high as $27.19.

Immucor holds about 55 percent of the $1.2 billion market for blood reagents and equipment that ensure the safety of transfusions, said David Turkaly, a Susquehanna Financial Group analyst in New York. While sales growth has slowed as hospitals demand better prices, the company still offers industry-topping operating margins of 39 percent as well as steady cash flows, he said.

"It's a great franchise, it's got awesome margins and it's a cash machine that has no debt," Turkaly said. "They have the best mousetrap, the best product for typing and screening blood, which is why they have a dominant share of the market."

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In a regulatory filing, the company said it expects the sale, unanimously approved by its board of directors, to close in the second half of 2011. No layoffs are planned. The deal was the result of a "long and robust exploration," in which "many options were explored with no transaction," Immucor said.

"We believe partnering with TPG Capital will facilitate the level of investment necessary to sustain and enhance Immucor's franchise for many years to come," the company said.

TPG, which manages about $48 billion in assets, said in a statement that it was attracted by Immucor's "impressive platform, loyal customer base and a strong leadership position." Michael Freitag, an Immucor spokesman, and Lisa Baker, a spokeswoman for TPG, declined to comment further.

There have been 2,295 announced or completed acquisitions for health-care product makers in the past five years, according to data compiled by Bloomberg. The companies sold for an average of $212.6 million and an average premium of 35 percent. The largest deal was Novartis AG's purchase of Alcon Inc. for $25.85 billion in 2008.

Immucor generated $329 million in revenue in the year that ended in May 2010 and is expected to bring in $330 million this fiscal year, based on a Bloomberg survey of nine analysts. Its sales and profit growth have slowed because of pricing pressure from clients and a U.S. investigation into alleged price-fixing, said Dan Leonard, a Leerink Swann & Co. analyst in New York, who covers medical diagnostics companies.

The U.S. Justice Department closed a criminal probe into reagent pricing without filing charges, Immucor and Johnson & Johnson, the No. 2 blood-screening company, said in filings in January and November. The Federal Trade Commission is also investigating the allegations. Mitchell Katz, an FTC spokesman, declined to comment.

TPG Capital, created in 1992 and run by David Bonderman and James Coulter, has participated in several of the biggest leveraged buyout deals ever, including the record-setting $43.2 billion takeover of TXU Corp. in 2007. TPG, which houses most of its executives in San Francisco, also is an owner of Caesars Entertainment Corp. and retailer J. Crew Group Inc.